E-commerce giant Alibaba has to acquire large overseas targets if it wants to emerge as a genuine global company, an analyst said in an article published on China Daily.
According to the report, the issue came up following Alibaba's recent takeover of Hong Kong newspaper South China Morning Post.
Mike Bastin, a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer at Southampton University, said in the China Daily article that if Alibaba wants to emerge as a genuine global company that can deal with competitive threats from other companies in the world, it must acquire large targets, preferably overseas companies such as European and/or U.S. corporate giants.
Bastin said that this would enable Alibaba to be included in the growing list of Chinese companies that are aiming to internationalize and modernize.
The article cited the $5.4-billion takeover of General Electric's appliance business by China's household appliance giant Haier, which it said is an example of Haier's penetration of the lucrative U.S. market as part of its growth strategy via overseas acquisitions.
Bastin noted that although Alibaba's SCMP takeover may be valuable in the digital media era, since it represents advancement and also strengthens the company's reputation, he wondered when the internationally aspiring giant would make a move similar to Haier's GE takeover.
The professor said it is time for Alibaba to get a major U.S. or European corporate catch and join the sizeable list of Chinese companies that has gained international prominence using the same route.
The article mentioned Lenovo's announcement to take over IBM's PC division in 2005, and a few years later, Chinese auto industry player Geely announced the buyout of the Volvo brand.
More recently, Chinese companies also took over world-famous overseas brands such as London's toy store Hamleys and U.K. breakfast cereal brand Weetabix.
Bastin said that a similar move by Alibaba will significantly establish the company as a credible global brand.
The professor added that Alibaba's listing on the U.S. stock exchange represents a major step in the right direction for the company. However, the investment community needs to see a bolder overseas takeover in order to be convinced of Alibaba's intent. He said if a takeover occurs in the future, Alibaba's announcement should be followed by clear integration plans that involve managerial talent at the top.
Bastin added that Alibaba may conquer the global markets if it has a suitable mix of talented professionals who have different cultural backgrounds. He said this will lead to much-needed modernization of Alibaba's corporate culture and a more transparent approach to international business.
The professor said that Alibaba's SCMP takeover may be news but it is hardly big news, adding that the only way forward is to have a multi-billion-dollar overseas company takeover.